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Republican legislative leaders have seemingly blocked Democratic efforts to include pay raises for state employees and teachers – contrary to Gov. Bill Haslam’s wishes – only to have a new effort launched from within the majority party’s ranks.

House and Senate floor votes are scheduled for today on Gov. Bill Haslam’s $32 billion state budget for the coming year. Legislative leaders plan to adjourn the 2014 session next week, perhaps on Tuesday.

Both chambers generally followed Haslam’s wishes on the budget bill (HB2501), including his recent decision to eliminate pay raises for teachers and state employees that he had proposed in his February first draft.

The House Finance Committee’s approval of the budget came after rejection of amendment attempts by House Democratic Leader Craig Fitzhugh of Ripley.

Fitzhugh’s lead amendment would have provided state employees, teachers and higher education workers with a 1 percent salary “bonus” in the coming year, using $50 million from reserve in a fund for making grants to economic development projects and $31.8 million from the state’s “rainy day” reserve fund.

“We are proposing to use about $80 million to give some of the raises that were promised 60 days ago,” said Fitzhugh. “This is something I believe we owe to our employees, our teachers and our higher ed employees as well.”
While the economic development incentives are important, he said, they should come behind state employees and teachers. Fitzhugh said there is about $200 million in the Fast Track Infrastructure Development Reserve Fund currently.

“It all sounds good and I would love to do it,” replied House Finance Committee Chairman Charles Sargent, R-Franklin, sponsor of the budget bill. “But this is not the time, when we are in a serious financial situation.”

Sargent said Fitzhugh was trying to create “a feel good situation.”

“This is not a feel-good situation. It’s a financial situation,” he said. “This is not a game. This is a very serious situation.”

Fitzhugh’s amendment was killed on an 11-6 party line vote in the committee. In the same fashion, the panel voted down another Fitzhugh amendment that would have diverted about $240 million from the state’s “assessment fee” on hospitals in a complicated move that he said would allow both Medicaid expansion and an improvement of the state’s budget situation as well through an inflow of federal funds.

In the Senate Finance Committee, there was less partisan debate, though Senate Democratic Leader Jim Kyle said the state has ample reserves – totaling about $1.7 billion – to provide a pay raise. The budget bill was approved 9-2.

But in a House Republican Caucus meeting, Rep. Matthew Hill, R-Jonesborough, proposed a plan for providing a pay raise to state employees and teachers – though not higher education employees.

Hill’s proposal has two parts. First, it calls for giving all state employees and teachers with three years or more of service a $500 bonus that would cost the state about $50 million. He proposes to use money from various reserves or divert it from other places – for example, $6.4 million now allocated to demolish a state office building in Nashville.

“All we’re doing is re-appropriating money,” he said.
Second, Hill would provide state employees and teachers with a one percent raise, contingent on state revenue rebounding between now and July 1, when the current fiscal year ends. Currently, state revenue is running about $270 million short of projections for this year, but Hill said he is optimistic it will improve and funds beyond those now anticipated should be set aside for a pay raise of up to one percent. Cost to the state would be about $40 million.

Hill said the plan was fiscally responsible because, it the money does not come in, then the raise will not take place.

But Sargent opposed the plan, saying it would add to the state’s budget problems next year and the contingent raise could turn out to be “a false promise.”
“We talk conservative. We need to act conservative,” he told the caucus.

In response to a question from Rep. Harry Brooks, R-Knoxville, Hill said University of Tennessee and Board of Regents employees are not included in his proposal because tuition can be increased to provide funding for pay raises if trustees so choose.

“Higher ed has a mechanism to get a raise already,” he said, while state employees and teachers must rely on the Legislature.

Hill said he plans to offer his proposal as an amendment in today’s floor debate. Fitzhugh said he will try his amendments again as well on the floor.